Inside skyscrapers just a short drive from the Atlantic and housing developments overlooking the Pacific, agents and lenders are comparing hopeful hints of rejuvenation to the first wobbly steps following near-death experience.

Albeit the upturn is weak and still mainly confined to the coasts, the commercial real estate industry is rising to the dawn of a national rebound, say market insiders in New York, Boston, Los Angeles and Seattle. But because these small waves of good business vibes haven’t yet lapped into the heartland, a debate is raging among industry experts as to the authenticity of any rebound.

“I am firmly on the side of recovery,” says David Rifkind, managing director of George Smith Partners, an L.A.-based real estate investment banking firm. While he acknowledges that capturing an accurate national snapshot of commercial real estate is “more art than science,” Rifkind believes he feels the early rumbles of a revival. He cites two reasons why many agents, developers and investors in New York and California “are busy” — and why, a country-wide commercial resurgence is looming.

“Most commercial real estate recoveries begin in core markets — usually the two coasts and with activity in core (investment-grade) properties. This is how this recovery is behaving,” Rifkind says. “After some time, the recovery spreads from there.

“It is precisely because we are in the beginnings of a market recovery that there is so much debate,” Rifkind adds. “Recoveries do not usually announce themselves ... Our colleagues in Kansas City, Atlanta and Dallas are not experiencing much in their local markets just yet.”

Credit is “opening up” and banks are starting to “step off the sidelines” for commercial deals, Rifkind contends. He points to the June 11 sale by J.P. Morgan Chase Commercial Mortgage Securities Corp. of a $716.3 million bond backed by commercial mortgages – the second deal of its kind this year and the first to include a portion without an investment-grade rating.

In Los Angeles, some recent commercial sales attracted more than 30 bids – the majority being cash offers, Rifkind says. In Manhattan, at least five transactions have been closed this year for buildings of more than 100,000 square feet and seven similar-sized deals are said to be under contract. In 2009, there were only nine such deals in Manhattan (compared to 101 in 2007).

BostonIn Boston, the design firm Stantec suffered through several development stall-outs when the U.S. economy sputtered. Today, those ventures are “sparking back up,” says Stantec spokeswoman Alison Smith. They include transforming a vacant office park into a mix of senior housing and retail space.

“The U.S. commercial real estate market is like an otherwise-healthy, 40-year-old heart attack patient (who) just went a through a sudden trauma but is recovering nicely with ... great prospects for a full recovery,” Rifkind says.

“A better analogy is that the U.S. commercial real estate market was like a freight train that was barreling down the tracks until it slammed into a brick wall,” says Dylan Taylor, the U.S. president for Colliers International, the world’s third-largest commercial real estate services firm. “The collision slowed things down, sure, but fortunately the train had sufficient momentum to keep going — only at a reduced speed.”

Because “gateway” cities like New York and L.A. are firmly latched to the global economy, Taylor says, the first whiffs of recovery would logically come from those markets, where foreign investors are expected to be most active. According to the World Bank, the global economy is expected to grow by 3.2 percent in 2010 and 3.3 percent in 2011 — after retracting by 2.1 percent in 2009.

There is early proof of a national price bump. The latest Moody’s/REAL Commercial Property Index, released June 21, showed a monthly gain of 1.7 percent in April. (The index is a periodic, same-property assessment of investment price change).

But the pleasant price news was quickly offset by disappointing jobs figures. In June, U.S. payrolls declined by 125,000, largely because the federal government cut 225,000 temporary workers conducting the 2010 census.

“Employment is the single best long-term, forward-looking indicator for commercial real estate values,” says Shari Olefson, a commercial real estate attorney in Fort Lauderdale and author of “Foreclosure Nation: Mortgaging the American Dream.” She sees no signs of a commercial comeback.

“The fundamental problems are still there,” Olefson says. Those pitfalls include higher vacancies, lower rent and shrinking property prices. And from her perspective, “literally no one (is) lending.”

Realty is local
Simply put, reality is shaped by where you live. And realty, as they say, is local.

“Commercial real estate values are still trending downward, and we expect this to continue for the foreseeable future,” agrees Keith Yang, president and founder of AuctionPoint.com, an online auction site for commercial real estate brokers.

In scores of cities, the final sales figures for commercial buildings are “consistently lower” than the asking prices, Yang says.

But even when sellers dangle lower prices, many buyers and investors are choosing, for now, to hold onto their money, “waiting for the bottom of the market,” Yang says. “There’s always going to be demand, but it’s a cycle where very few deals are getting done ... which is adding to the market’s uncertainty.”

A “grand re-pricing” must occur across the commercial real estate market, Yang contends. Until the gap between buyer and seller expectations is narrowed, “we will continue to see gridlock.”

So while fresh hope buds in New York, Boston, L.A. and Seattle, commercial investors and developers in heartland markets are “are getting despondent,” says Alan Guinn, managing director of the Guinn Consultancy Group in Bristol, Tenn. His firm has developed alternative energy projects and consulted on real estate ventures with businesses in Memphis, Las Vegas, San Jose, Charlotte, Atlanta, Nashville, and Cleveland.

Indeed, some commercial real estate “gains” grabbed recent headlines, Guinn acknowledges. But “in most cases” positive news on the commercial front is “due to mergers and acquisitions, or consolidations of businesses,” he adds. “That, in and of itself, however, is not good news” because it shows that “businesses can't financially survive in the morass into which they have been thrust” and “sales have slid to levels where business growth and development simply can't be supported.”

Given the still-surging river of commercial real estate defeatism, how can any optimism leak through on the coasts?

“I often wonder myself,” says Olefson, the author and attorney. Truth is, the glass-half-full agenda simply can’t be shaken for many commercial or residential agents, she adds. “Read a (National Association of Realtors) newsletter the next time existing home sales or some other residential indicator is released. It’s almost humorous how they can present not so great news in a better sounding light.”